Industry-wide wage increases set and subsidised by government put small businesses under pressure

Comments by Shadow Workplace Relations Minister Brendan O’Connor that Labor has “no plans” to subsidise pay rises for sectors beyond child care are welcomed by Australia’s largest business network, the Australian Chamber of Commerce and Industry, while repeating its warnings against the negative impact that industry-wide wage increases set and subsidised by government would have on business, particularly small businesses.

This followed earlier announcements by Labor that, if it wins government, it would use taxpayers’ funds to pay for a 20% wage increase over eight years for childcare workers and that it has “picked childcare workers to go first”, leading to calls for intervention in other sectors including aged care.

“Whilst we welcome the Opposition’s decision to limit Government subsidised wage increases to the child care sector, this decision still sets a worrying precedent. It has led, inevitably, to union demands for government-funded wage increases in other industries,” James Pearson, CEO of the Australian Chamber of Commerce and Industry, said today.

“Employers are concerned at the impact on the viability of small businesses, and the wage setting system they depend on, of government intervention to set and pay for wage increases in the child care industry. That concern will intensify if government comes under pressure to set and subsidise wage increases in other industries.

“Hundreds of thousands of small businesses employing millions of Australians depend on an independent and impartial wage-setting process that takes account of their needs and those of their employees, not just the demands of unions. It is the responsibility of the Fair Work Commission, operating independently, to set both minimum and industry-specific wage rates, not the government of the day.

“These small businesses will not be able to compete with pay increases inflated by government forcing up wages directly in selected sectors. Artificially inflating the wages of some private sector workers and not others would have a snowball effect, with no consideration of the capacity of businesses without taxpayer subsidies to pay. This would force some business owners to cut hours, lay off staff or close their doors.

“Businesses are also concerned that wage increases set and subsidised by government will be directed through enterprise agreements. That will disadvantage smaller businesses. When a similar scheme was put in place under the government of Prime Minister Gillard, an independent review found the program “disadvantaged” small providers who have less experience with the process and were exposed to inappropriate union behaviour and interference.

“The Australian Chamber calls on the Opposition to rule out extending subsidised wages beyond child care and to assure small providers in the child care industry that their needs and those of their employees and customers will take priority, not the demands of unions.”

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